4 ms·

But meritocracy is different from income inequality. Some examples. Society 1 has classes. The small owning class has all their income from their inherited inv

But meritocracy is different from income inequality. Some examples. Society 1 has classes. The small owning class has all their income from their inherited investments. While the majority are peasants. If you are a peasant, no matter how hard you work, you won't get any more pay and thus cannot do investments. Society 2 has no real classes. Taxes on inheritance are high. Education is free. Startups are supported by the governments. Rich people's offspring don't usually just live on investments. In families, generations and even siblings move up and down between rich and poor status all the time. Society 1 and 2 might have the same income inequality by some metric. Yet 2 is much more meritocratic than 1.

pclmulqdq 4y ago
The problem with society 2 is that people have very few incentives to start new companies, except if they can use the startup to reach into the pot of government subsidies for less effort than any other job. In other words, the people who start companies will be the nephews of the officials who control the pot of money. This is what happened in the Soviet Union. The economy hollowed out under this set of "fair" rules because human nature was left out of the equation. Corruption wasn't allowed, but it happened on a massive scale because it was effective. The more "fair" system resulted in greater income inequality than the unfair capitalist countries! Forget income inequality. The metric we should be tracking is median income (in real terms). Wealth of the normal household is what we want to optimize, so optimize for it. Horribly unequal capitalism has been great for the average person. "Fair" systems, not so much. "Meritocracy" is a bad word for what people who like capitalism actually want.
- BlargMcLarg 4y ago
  Uh, going from 2 to Soviet Union is quite the leap. The way 2 is described, it is more like your average West European country today, depending on what GP believes is "high" inheritance tax. 2 would work just fine for many years, especially if inheritance tax was progressive. Don't underestimate the good will of some people, and the need to excel above others for some other people. As long as the incentives aren't flat-out dead and the people in charge aren't corrupt to the bone.
  - pclmulqdq 4y ago
    2 is described based on the government funding startups quite heavily and having heavy inheritance taxes and "no real classes," where rich kids "don't usually just live on investments." This is not how your average Western European economy functions. Yes, they have free education and healthcare, but startups are still very risky and unsubsidized, and rich kids do get to inherit a lot of wealth. Risk and income inequality (in other words, the important factors for wealth creation as in society 1) are very much alive and well in Western Europe.
    - BlargMcLarg 4y ago
      Commenter in question has yet to articulate their points. You're already pushing "government funding startups quite heavily", which original comment never specified, and "heavy" is still too vague to quantify. Even so, this doesn't answer why 2 wouldn't work. Unlike communism, there are clear incentives for individuals to provide merit and do better other than "hoping to see your hard work trickle back". Unlike modern day capitalism, your future isn't largely decided by your (lack of) inheritance. The only thing that holds is corruption, but really, you'd have an easier time listing things that don't get worse for the commoner when corrupted. Nevertheless, the point isn't "this is Western Europe". The point is, you were already going off the deep end with a Soviet Union comparison, while 2 the way it is described is still a far cry from it. We don't need to choose between the extremes of capitalism and communism when there's something in the middle that can work out better, and we have yet to explore it. It's pretty evident unbridled capitalism isn't helping in several aspects either, even if it is holding together longer than Animal Farm. Risk and income inequality still apply to society 2 as important factors.
      - pclmulqdq 4y ago
        Sorry, but you picked out the "government funded startups" line. How about the "no real classes" and "don't usually just live on investments"? Also, it is not true that inheritance defines your wealth in modern capitalism. Most billionaires and almost all millionaires are self made in the US (ie they don't come from billionaire or millionaire parents).
- jhgb 4y ago
  In Soviet Union, the "startups are supported by the governments" was not true. Neither was the "no real classes" part because Nomenklatura existed. The real reason why people had "very few incentives to start new companies" in the Soviet Union was because they were deprived of the benefits of doing so, not because Soviet Union was a "type 2 society" as described above.

pclmulqdq 4y ago

The problem with society 2 is that people have very few incentives to start new companies, except if they can use the startup to reach into the pot of government subsidies for less effort than any other job. In other words, the people who start companies will be the nephews of the officials who control the pot of money. This is what happened in the Soviet Union. The economy hollowed out under this set of "fair" rules because human nature was left out of the equation. Corruption wasn't allowed, but it happened on a massive scale because it was effective. The more "fair" system resulted in greater income inequality than the unfair capitalist countries! Forget income inequality. The metric we should be tracking is median income (in real terms). Wealth of the normal household is what we want to optimize, so optimize for it. Horribly unequal capitalism has been great for the average person. "Fair" systems, not so much. "Meritocracy" is a bad word for what people who like capitalism actually want.

BlargMcLarg 4y ago
Uh, going from 2 to Soviet Union is quite the leap. The way 2 is described, it is more like your average West European country today, depending on what GP believes is "high" inheritance tax. 2 would work just fine for many years, especially if inheritance tax was progressive. Don't underestimate the good will of some people, and the need to excel above others for some other people. As long as the incentives aren't flat-out dead and the people in charge aren't corrupt to the bone.
- pclmulqdq 4y ago
  2 is described based on the government funding startups quite heavily and having heavy inheritance taxes and "no real classes," where rich kids "don't usually just live on investments." This is not how your average Western European economy functions. Yes, they have free education and healthcare, but startups are still very risky and unsubsidized, and rich kids do get to inherit a lot of wealth. Risk and income inequality (in other words, the important factors for wealth creation as in society 1) are very much alive and well in Western Europe.
  - BlargMcLarg 4y ago
    Commenter in question has yet to articulate their points. You're already pushing "government funding startups quite heavily", which original comment never specified, and "heavy" is still too vague to quantify. Even so, this doesn't answer why 2 wouldn't work. Unlike communism, there are clear incentives for individuals to provide merit and do better other than "hoping to see your hard work trickle back". Unlike modern day capitalism, your future isn't largely decided by your (lack of) inheritance. The only thing that holds is corruption, but really, you'd have an easier time listing things that don't get worse for the commoner when corrupted. Nevertheless, the point isn't "this is Western Europe". The point is, you were already going off the deep end with a Soviet Union comparison, while 2 the way it is described is still a far cry from it. We don't need to choose between the extremes of capitalism and communism when there's something in the middle that can work out better, and we have yet to explore it. It's pretty evident unbridled capitalism isn't helping in several aspects either, even if it is holding together longer than Animal Farm. Risk and income inequality still apply to society 2 as important factors.
    - pclmulqdq 4y ago
      Sorry, but you picked out the "government funded startups" line. How about the "no real classes" and "don't usually just live on investments"? Also, it is not true that inheritance defines your wealth in modern capitalism. Most billionaires and almost all millionaires are self made in the US (ie they don't come from billionaire or millionaire parents).
jhgb 4y ago
In Soviet Union, the "startups are supported by the governments" was not true. Neither was the "no real classes" part because Nomenklatura existed. The real reason why people had "very few incentives to start new companies" in the Soviet Union was because they were deprived of the benefits of doing so, not because Soviet Union was a "type 2 society" as described above.